Ethiopian farmers can now secure bank loans by using their moveable assets as collateral in order to help them meet their cash-flow needs amidst coronavirus pandemic.Ethiopian small scale farmers have found it tough to secure bank loans due to their size and lack of financial history.
Announcing the new directive on Thursday, Governor of the National Bank of Ethiopia Yinager Dessie said the new directives will be a game changer to transform the agriculture sector which employs over 80 percent of the total population.
“We have now prepared the Collateral Registry and the directives will be implemented this coming Ethiopian New Year which will begin September 11, 2020.
Accordingly, banks will allocate 5 percent for small farmers using movable properties as collateral starting from September, 2020.
Yinager said that the National Collateral Registry (NCR), an online centralized-database, which commenced operation in May, now allows financial service providers to register security interest in movable assets.
He said that the registry, set up by the Federal Government, is being maintained in line with NBE regulations. According to him, the innovation would facilitate easy lending by financial institutions to individuals, farmers and cooperative unions.
“The registry will enable these categories of borrowers to use movable assets such as inventory, livestock, crops equipment, vehicles and accounts receivable as collateral for loans,”he said.